Medicare

The biggest threat to America?

Many Americans, I suspect, would respond with “the Trump administration”and perhaps history will will prove them right, but in the meantime the immediate threat is under-informed, poorly informed, ignorant Americans who are susceptible to political propaganda… who vote.

Guess what Ada, what you paid into Social Security is long gone. That money paid someone else’s benefit years ago and even if it didn’t it would not pay your benefits for very long. Better do a new calculation because those contributions will only last around seven years. Besides, I suspect you don’t know how many “remaining years” you have and while any money you may save has a finite limit, Social Security doesn’t, even in its current state. What you also seem to forget is that Social Security is much more than the worker’s retirement income, much more.

And what you paid into Medicare will pay for one moderately long hospital stay (which I hope you never need to use).

There is no connection between the fiscal state of Social Security and Medicare and the need to fix both and the Republican tax proposals. Those fiscal problems predate Trump by a decade or more. And fixing them has been ignored by both political parties for many years.

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7 replies »

  1. When you caution Ada, you need to incorporate what her investment should have earned over the past 50 years – before you suggest that she did not fully fund the benefits she would receive. Depending on her length of employment, when it ends and her level of compensation, she may have fully funded not only her benefits but others as well. I know I have funded dramatically more, over my working career (now 48 years and counting) than I will ever receive (currently age 65 and still at it).

    Specifically, failure to adjust the contributions for the present value makes comparisons into a bigger lie than the ones Congress tells us when they suggested revenues are sufficient to pay the scheduled benefits.

    You are incorrect when you suggest that disability and survivor and spouse benefits are a large component of Social Security. Few receive disability – and even in today’s world, many of the disability benefits paid are not much more than unemployment or welfare benefits for older workers who lose their employment. Survivor benefits for minor children are a minor cost to the program. Finally, the spouse’s benefit (while the beneficiary is alive is just part of the retirement benefits), and once the beneficiary dies, the spouse’s benefit is nothing more than the retirement income that would have been paid to the beneficiary herself had she survived.

    No, the majority of Social Security taxes are paid to finance old age benefits. Similarly, when the money runs out, it will be because there are too many old age people claiming benefits compared to younger folks paying into the system. Too many suggest the deficit occurred because higher paid individuals did not shoulder their “fair share”. Fact is, higher paid Americans who pay in for 35, 40 or more years will never recover the present value of the taxes they paid – and yes, increasingly, that also includes Medicare benefits (where FICA-Med taxes were uncapped since 1993), and where general revenues, also paid disproportionately by higher income Americans, fund Medicare Part B, and Part D).

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    • And is it true that a single person and a married person with same earnings record pay the same in taxes, but the married person gets at least 50% more in benefits? And what if that person saving and investing their own money becomes unable to continue to do so at say age 55 or in the first five years of retirement the market takes a tumble and funds must be used in excess as planned? To say what could be if ones invested the taxes compared with what is with SS is a false comparison in my opinion. If for no other reason than the vast majority of people would never be that disciplined if they had the opportunity. Disabled and survivor benefits account for 27% benefits being paid 68.5% of paid benefits go to retired workers.

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      • But, people did “contribute”. Your suggestion that people would not have contributed is again misleading.

        I agree with your comment on spouse’s benefits, but again, that only INCREASES the disparity between high paid, long service folks with short working history, low paid folks – where minimum benefits kick in.

        Much of the recent disability benefit is nothing more than welfare, continuation of unemployment, or early retirement – that is, the person stopped working due to job loss, not some change in their medical condition. You’ve seen it. People who are disabled are actively at work everyday – until they are not, whatever the reason for job loss.

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      • You’re absolutely correct about disability. Was amazed back in 2009 when so many transitioned from unemployment where one is supposed to be looking for work to disability the day those benefits ran out. And the track record of getting off SS disability is not good.

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  2. The problem for people like Ada is that they continue to think of social security as a savings account when it should be more accurately viewed as a Ponzi scheme. A Ponzi works well as long as there are plenty of new investors but once the new investors stop buying in, the scheme fails.

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